Freegold Ventures' Jackson resigns from board
2009-01-14 08:32 ET - News Release
Mr. Steve Manz reports
FREEGOLD FINANCING UPDATE
Freegold Ventures Ltd. has provided an update on its efforts to secure additional financing for the repayment of its $4-million (U.S.) in bridge loans and to provide additional working capital for the company.
Freegold has recently received terms from a private European lender for a secured line of credit of up to $10-million (U.S.) for a maximum maturity of three years. Terms under this facility include interest that will be paid annually on each anniversary of the closing, based on the average U.S. dollar three-month London interbank offered rate (Libor) during the period plus 2 per cent per year. The facility is to be collateralized by a first priority pledge of the shares in Freegold's wholly owned U.S. subsidiaries and a general security agreement against the personal property of the company (including a second charge against the processing and private property assets currently collateralizing an equipment loan at Golden Summit). Funds drawn under the line of credit may be repaid at any time, and no upfront fees or conversion rights are being paid or granted to the lender. Upon the company receiving advances totalling a minimum of $7.5-million (U.S.), the lender will receive 750,000 warrants to purchase Freegold common shares for a period of two years from the date of grant at a price of 30 cents per share. A finder's fee, payable in cash and equal to 4 per cent of the amounts drawn under the line of credit, will be paid to an arm's-length party in connection with this financing.
Funds drawn under this facility will be used to repay in full the company's $4-million (U.S.) in bridge debt. Closing of this facility is expected to occur within the next three weeks, and in consideration of this timing, the bridge lenders have agreed to extend the maturity of their loans to Feb. 10, 2009. As consideration of this extension, the exercise price of the 350,000 warrants each lender received at the time the bridge loans were advanced will be reduced from 66 cents and 55 cents respectively to 30 cents, and the company will issue each lender an additional 250,000 common shares. Pursuant to the policies of the Toronto Stock Exchange, the repriced warrants may not be exercised for a period of 10 business days. The other terms and conditions of the bridge loans will remain unchanged.
Freegold also announces that Robert Jackson, president of Tiomin Resources Inc., one of Freegold's bridge lenders, is also stepping down from the board effective immediately. The company would like to thank Mr. Jackson for his service to the company and wish him the best in his future endeavours.
Commenting on the financing, Freegold president and chief executive officer, Steve Manz, said: "We are very pleased to have been able to obtain terms for a facility of this size and term during these difficult market conditions. We have always been sensitive to the issue of equity dilution. Our last equity financing closed in June, 2007, and should we be successful in closing this new line of credit, we would continue to avoid the issuance of a large numbers of shares at low share prices to provide the company with additional working capital. Closing of this facility would allow full repayment of the two bridge loans on a more favourable and longer term basis, and the company would remain well positioned to continue to add value to its advanced Alaska and Idaho projects. Following completion of the financing, work over the coming months would involve low-cost analysis and modelling of the extensive programs undertaken this year on our four projects, after which we would evaluate the best manner to move the projects forward and add to our overall gold resource base."
The transactions described herein are subject to regulatory approval.
